I, like many other personal finance bloggers, am a huge fan of IRAs because they give you a tax-advantaged opportunity to save for your retirement. Both types, the Roth and the Traditional, offer tax benefits that are hard to find anywhere else. The Roth IRA offers you to reap the growth of your retirement assets tax free while the Traditional IRA gives you an immediate tax benefit for contributing to your own future.

There’s a reason why the IRS puts contribution limits on IRA accounts. As many of you know, you have until April 15th to make a contribution to your Traditional or Roth IRA for the 2009 tax year. What you may not know is how much you’re able to contribute.

IRA Contribution Limits

In addition to the current year’s contribution limit, I’ve also included some historical limits to put the current IRA contribution limit into a bit of perspective (as you can see, not much has changed!):

Tax Year

Contribution Limit

Catch-Up (50+)

2006-7

$4,000

$1,000

2008

$5,000

$1,000

2009-2012

$5,000

$1,000

2013

$5,500

$1,000

The value in the “Catch-Up” column is how much more someone aged 50 and over can contribute towards their IRA.

Roth IRA Phaseout

With the Roth IRA, your contribution is limited by your modified adjusted gross income and the phaseout starts at $112,000 for single filers, $178,000 for married filing jointly). Rather than explain all the math, I created a calculator that does the math for you. May I present this very simple Roth IRA phaseout calculator. If you provide your modified adjusted gross income and your filing status, it will tell you how much you can contribute.

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Still, a future increase WOULD be a good thing, if not an outright “improvement,” per se. If, as time goes on, there are no increases, your ability to contribute (amount you can contribute in real terms) would progressively decrease. And that’s not good.

Great reminder. I forgot to contribute to my Roth IRA this past year, so I have to make sure to get the contribution in before April. It’s great that they give us more time to contribute beyond the end of the year.

For the ‘youngsters’ out there that are on the edge of whether or not to create, or contribute more, to an IRA right now… do it!

What may seem like a small amount right now will be a large amount of your income once you are retired and that comes more quickly than you think it will. Been there, done that, so thankful now that I did.

this. I try to convince all my friends to open it and put in as much or as little as possible. do something!!! because it will add up and make your life easier as you get older. alas, too many people my age don’t look that far ahead

I worked for three different companies. In each case they did away with my pension. I rely almost exclusively on what I saved (don’t feel bad for me – I made some good investments).

The point here is that it is never to early to save and live by the 100 rule. Invest 100 minus your age in the stock market, diversify, don’t be afraid to take risks and invest the MAX into some IRA account.

When I was 18, my mom had me open a Roth IRA account, and motivated me to contribute by matching whatever I put in the first year. I am in my late 20s and have been contributing most years since – she set a great example, one I hope to follow with my children someday.

The article never explained why is there a contribution limit at all for retirement. I tend to agree with Thomas that the govt really doesnt want people to be self reliant and the lip talk they give on retirement accounts isnt really the truth.

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